As states decide whether to implement a health insurance exchange under President Obama's health care law, the U.S. Department of Health and Human Services has encouraged states to do so by touting the flexibility of implementation. One area where exchanges will likely provide little or no flexibility, however, is in the distribution and coverage of abortion services.

Some advocates for exchange implementation have claimed abortion coverage will be more easily blocked in a state-crafted exchange than a federal one, pointing to Section 1303 of Obama's law. The provision, "State Opt-Out of Abortion Coverage," reads, "A state may elect to prohibit abortion coverage in qualified health plans offered through an Exchange in such State if such State enacts a law to provide for such prohibition."

But Michael Cannon, director of health policy studies at the Cato Institute, argues the language of the federal health care law allows states to prevent abortion coverage in either exchange system. He says the opt-out provision allows states to prevent abortion coverage in a federal exchange should they refuse to implement one on their own.

State Exchanges Can't Block Abortions

To those for whom pro-life initiatives are of major concern, Cannon says a state-created exchange may actually hinder efforts instead of helping.

"If a state establishes an exchange, there will be federal subsidies for abortifacients and contraceptives," he said. "If a state refuses to implement an exchange, the statute allows no federal subsidies for those items," essentially blocking federal funding of drugs and services that are currently a key concern for prolife groups.

Cannon says it may be equally difficult to prevent much intrusion in state policy from the federal level in either type of exchange. For example, even if states ban abortion coverage in qualified health plans, exchanges may still offer it as a separate rider.

Cannon notes HHS regulations give the federal government complete authority and oversight over any exchange, federally or state-crafted. Additionally, the final exchange rules distributed by HHS state Secretary Sebelius will approve a state's exchange only if "all minimum" federal requirements are met, and "an exchange may not establish rules that conflict with or prevent the application of exchange regulations promulgated by HHS."

Kendall Antekeier joined The Heartland Institute in June 2011 as legislative specialist on health care issues. Her responsibilities include interacting with elected officials and staff on health care issues; tracking new legislation; and drafting responses to emerging issues via talking points, news releases, and op-ed pieces, with the goal of educating legislators and informing them about free-market ideas.